Welcome to our weekly blog on financial matters focusing on debt, debt reduction and alternatives to bankruptcy. Our blog is written by our Senior-Vice President, Brandon Smith, who is a licensed trustee in bankruptcy, hence the title, Brandon’s blog.
Brandon writes on topics of interest for individuals and businesses. We hope that you enjoy Brandon’s blog, visit every week to see the new Brandon’s Blog and spend time on our website learning from the information we provide about bankruptcy, debt consolidation, debt settlement, consumer proposals, restructuring and receivership. We also hope you will spend some time on our website – www.irasmithinc.com, finding out more about our Firm and people.
At Ira Smith Trustee & Receiver Inc., we want to help people for Starting Over, Starting Now, living a debt free life.
How can a good credit score help you? Introduction
Many of you already know that you need a good credit score to borrow money, get a mortgage, lease a car, get insurance and in some cases, even get a job. But, how many of you know how can a good credit score help you? It can save you thousands of dollars.
How can a good credit score help you? What does your credit score say about you?
Your credit score tells prospective lenders how reliable or unreliable you are at repaying debt. Based upon your credit score you’ll be approved or denied when applying for a loan, credit card, mortgage, car lease…
How can a good credit score help you? How can your credit score save you money?
When applying for any type of loan, your credit score also determines what sort of terms you’re likely to get.
Insurance Rates: Insurers typically create an “insurance score”, which is largely based on your credit score. With a good credit score, you could qualify for a discount on your premiums. Conversely, a bad credit score can cost you a lot of money annually in higher premiums.
Loan Rates: With a good credit score you may get a better mortgage interest rate. Over the life of your mortgage this could save you thousands of dollars. The same applies for any type of loan – car loan, personal loan, etc. The more you’re borrowing and the longer the term of the loan, the more money you can save.
Internet, TV and Cell Phone Rates:Many providers do a credit check before giving you service. With a bad credit score you may be denied service altogether, or you may be required to leave a sizeable deposit as a guarantee of payment.
How can a good credit score help you? What is a good credit score?
An average credit score is around 600. A very good credit score is 700 and above.
How can a good credit score help you? Do you know your credit score?
If not you can find out by contacting either one of Canada’s two major credit reporting agencies – Equifax or TransUnion. Make a habit of checking your credit score annually. If your credit report has information that’s inaccurate or has items unfamiliar to you, it could be a sign that you’re a victim of identity theft.
If you’ve been turned down for loans due to a bad credit score, you need professional help to get back on track financially. A professional trustee can help you solve your debt problems with immediate action and a solid financial plan. Give Ira Smith Trustee & Receiver Inc. a call today to book a free, no obligation consultation and you’ll be well on your way to debt free living Starting Over, Starting Now.
Many people I help are caught in a credit card debt trap. It’s always good to repay your credit card debt, and now could be a better time compared to ever before to do so. I have previously written about the Canadian household debt crisis as Canadians take on more debt and average canadian household debt levels increase. Rates of interest are beginning to increase so combining the two creates a mix that can place people in a bind.
Credit card debt trap: A storm is brewing
In December, Statistics Canada reported that the Canadian household debt ratio struck a brand-new high. The ratio of household credit-market debt to disposable income (the key gauge for measuring Canadians’ debt loads) rose to 171.1%. “Everyone has this sense that there is a storm brewing,” said Bruce McClary, spokesman for the National Foundation for Credit Counseling in the U.S.
“All indications that we’ve seen are that people are carrying higher balances from month-to-month and more are behind on their monthly payments. That’s not a healthy mix.” Climbing debt levels could suggest people really feel better about the economy. Our concern is that people could be over-extending themselves. Both the US Federal Reserve and the Bank of Canada expect to raise rates later this year, so the cost of lugging credit card debt is most likely to increase. What can you do try becoming credit card debt-free? Our revolutionary 4 step plan can help get you there. Step 1. Credit card debt trap: Take control
It isn’t easy to take a difficult look at your financial position, but it is a necessary one. Analyze your financial obligations, and the rates of interest connected to each debt, as well as minimal repayments. Track your costs to get a feeling of what your credit card charges get you every month. This is the first step in understanding your expenses and cutting back on the ones that are not necessary. To understand where you are going, you should understand where you have actually been. Step 2. Credit card debt trap: Minimize rates The typical interest rate on a bank card is about 19 percent. That’s quite high, so you might wish to think about transferring your credit card debt to a card with a reduced or zero-interest first offer rate to help pay it off much faster.
A word of caution: you’ll most likely need to pay a transfer cost in doing so. Also, you will need to pay off the debt prior to that promo rate finishes. Otherwise, the balance at that time is charged a higher interest rate, probably the same or higher than the card you transferred the debt from.
Although I don’t hold out a lot of hope, you can ask your credit card firms if they will decrease your interest rate.
credit card debt trap
Step 3. Credit card debt trap: Plan choice If you simply cannot earn enough to fund your repayments, think about a non-profit credit counselling service. Do not go to any of the debt settlement companies that advertise regularly on television or social media.
All they do is charge you a fee to take down basic information, and then send you to a licensed insolvency trustee. Going first to a licensed insolvency trustee will do more good for you in a first free consultation than the debt settlement company will. There are 2 typical debt settlement approaches– avalanche as well as a snowball. The avalanche method of getting out of the credit card debt trap works by placing all your money towards your highest possible rate of interest debt. As soon as that’s settled, you begin repaying the following most costly debt till it’s all gone. In some cases, the snowball approach offers much more inspiration. With this technique, you repay the tiniest debt initially, to increase your spirits. You make use of that energy to pay off what is not the smallest outstanding debt and so on. You are picking up steam like a snowball rolling downhill.
It does not matter which method you use. The important thing is that you start now and stick to it. Step 4. Credit card debt trap: Adhere to it Remember your single emphasis ought to be lowering debt, so do not plan any kind of elegant getaways or huge acquisitions in the meantime. You could backslide or strike some roadway bumps yet do not allow that to sap your inspiration. Now for the tough part. When possible, save some money to aid with unforeseen expenditures that you would normally place on your credit card. This will lessen the amount you would have to charge by paying with cash. Credit card debt trap: A lengthy and painful trip to get out of it
It’s an incredibly lengthy and painful trip to get out of the credit card debt trap. It also can be a very lonely one. People don’t get into the credit card debt trap overnight, so you can’t get out of it without some hard work.
The Ira Smith Team has helped many people stay the course and be stimulated by their successes. We have helped many people avoid bankruptcy.
Contact the Ira Smith Team today. Your first consultation is free. We will be there with you every step of the way to help you out of the credit card debt trap so you can begin living credit card debt-free. If it isn’t credit card debt you are worried about, but rather other kinds of debt trap you may be caught in, we can help free you from those too.
To deal with debt you need the help of a debt professional – a trustee. Dealing with debt is not something that you can put off any longer. Start the New Year off right by calling Ira SmithTrustee & ReceiverInc. today and make an appointment for a free, no-obligation consultation.
We can give you back peace of mind and put you on the road to debt free living StartingOver,StartingNow.
Last week we posted a video and blog about secret debt in marriage. It’s clear from various surveys and reports that many Canadians are not pleased with the way their loved ones handle their finances. The reality is that once you get married the proverbial horse is out of the barn. The time to have serious talks about your finances, your debt acquired before marriage and how to manage money, is before you get married.
Debt acquired before marriage: You need to discuss more than just wedding plans
Are you one of many couples that got engaged on Valentine’s Day? I’ll bet that right now you’re solely focused on wedding planning? I know it’s not romantic or fun, but sorting out money management issues should be right up there on your list of priorities. Love may have brought you together but finances can tear you apart.
Debt acquired before marriage: It’s all about trust
Managing finances as a couple means a lot more than deciding who’s paying for what, or opening a joint bank account to pay household bills. It’s all about trust, communication and transparency. Have you openly and honestly discussed pre-marital assets, debt, spending habits, saving goals and a budget?
How much do you really know about your fiancée’s finances?
Debt acquired before marriage: Start on firm ground
If your soon-to-be spouse is not prepared to discuss these issues and agree on money management then you’ll be starting your marriage on shaky ground. According to a Citibank survey, 57% of divorced couples cited money problems as the primary reason for the demise of their marriage.
Debt acquired before marriage: We can help solve your debt problems
The time to deal with serious debt issues is prior to marriage. Contact the Ira Smith Team. We’re not marriage experts, but if you give us a call today you can be well on your way to starting your marriage without serious money problems Starting Over, Starting Now.
Toys R Us bankruptcy protection in Canada: Introduction
I want to tell you about a recent Ontario Court decision about the claims process approved in the Toys “R” Us (Canada) Ltd. and Toys “R” Us (Canada) Ltee (Toys R Us) bankruptcy protection proceedings. The Toys R Us bankruptcy protection in Canada began with the Court making the Initial Order on September 19, 2017. This Initial Order was made under the Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C-36, as amended (CCAA).
On January 25, 2018, the Toys R Us bankruptcy lawyers attended in Court. There was a motion before the Court to extend the time that Toys “R” Us remains under bankruptcy protection to try to restructure. The motion was also for the Court to approve a draft claims process to quantify the outstanding creditor claims.
Toys R Us bankruptcy protection in Canada: The normal claims process
It is the claims procedure which while not novel, is also not regularly seen. That is what I want to talk about.
In a bankruptcy regulated by the provisions of the Bankruptcy and Insolvency Act, RSC 1985, c.B-3 (BIA), creditors are required to prove their claims independently. They do so by providing to the trustee in bankruptcy sworn proof of claim forms that are accompanied by supporting invoices and other pertinent documents. The detailed treatment for creditor claims to be proven and counted is not set out in the CCAA like it is in the BIA.
The Court routinely grants claims procedure orders under the Court’s general powers under ss. 11 and 12 of the CCAA. Claims process orders generally involve developing a technique to interact with all the creditors. This is so they can file their claims. It normally creates a process to communicate to (potential) creditors. It tells them that there is a process they must follow to prove their claims by a specific date.
Toys R Us bankruptcy protection in Canada: Why do we even need a claims process?
The claims process includes an opportunity for the company under restructuring proceedings, or its representative, to check all claims. The Monitor, or its representative, can disallow creditors’ claims, either in whole or in part. The claims procedure establishes an adjudication mechanism. If claims are not agreed upon and cannot be settled by negotiation, then the adjudication process begins. This could be either in court or first by arbitration. Decisions on the claims of creditors are then subject to an appeal to the Court.
Claims procedure orders will usually also set a claims bar date. Claims will not be accepted after this date. it is necessary to have a cut off to give the right numbers for voting and distribution purposes. Late claims won’t be allowed. In this way the Monitor achieves finality.
Toys R Us bankruptcy protection in Canada: Who has the most up to date books and records?
Most large businesses, including Toys R Us, have readily ascertainable payables outstanding. Sophisticated electronic systems carefully track these amounts, supervised and reviewed by the company’s senior financial staff. The electronic systems not only track purchases and payments, but also the many vendor allowances which are offsets to the accounts payable.
Such offsets include:
guaranteed sale provisions, which means if the product does not sell within a specific period, Toys R Us can either return the unsold items to the vendor, or take massive discounts against amounts owing for such products;
early payment discounts, promotional allowances, warranty fees, co-op/marketing fees and defect fees; and
shipping and warehousing fees
So for large companies like Toys R Us, the vendor will most likely be reconciling their books to what the company shows on its books net of the various offsets.
Toys R Us bankruptcy protection in Canada: The recommended claims procedure
The recommendation to the Court was for a different type of claims process. As indicated above, the process required by the BIA is a positive one. It requires each creditor to prove the state of its outstanding claims by submitting a sworn proof of claim backed up by invoices.
The draft form of claims process submitted to the Court in the Toys R Us bankruptcy protection in Canada proceedings was a different one. It proposed to list creditor claims from the company’s books and records and to provide each known creditor with a simple claim statement. The statement would set out the amount of the respective creditor’s claim recognized by the company. If a creditor agrees with the amount that the company says it owes, the creditor need do nothing and the listed claim will become the final proven claim at the claims bar date. I call this a negative claims process.
Creditors who disagree with the amounts set out in their claims statement can file a dispute notice with the Monitor by the claims bar date to begin a review process.
toys r us bankruptcy protection in canada
Toys R Us bankruptcy protection in Canada: Advantages of the negative option
This negative option has certain advantages in companies such as Toys R Us. These advantages include:
eliminating the need for filing proofs of claim and supporting evidence in the majority of cases;
guarantees that known claims won’t lose out if a certain percentage of creditors to fail to file their claims on a timely basis; and
making the claims process streamlined; and
making the process easier for recognizing and counting all known creditor claims
Toys R Us bankruptcy protection in Canada: The negative option approved by the Court
The proposed claims process met the needs of the Court to ensure that any claims procedure is both fair and reasonable. The negative option claims process proposed in the Toys R Us case met the needs of the Court. The Court approved the negative claims process in the Order dated January 25, 2018.
Toys R Us bankruptcy protection in Canada: Does your company require restructuring?
Your company may not be as large as Toys R US, but it is the most important one to you. Your company may be facing financial challenges, and you have tried everything you can think of to solve the problems. But the red ink still flows. Many families rely on you and your company to continue for their survival. You have invested your money, your blood, sweat and tears in your company, and want to do everything possible to save it.
If you find your company in this situation, then you need the help of a professional trustee immediately. Call Ira Smith Trustee & Receiver Inc. If we consult with you early, we could develop a restructuring and turnaround strategy. By doing this your business will once again thrive. It may not be as complex as the Toys R Us bankruptcy protection process in Canada, but it is the most significant one for you.
Our approach for every person and company is to develop an outcome where Starting Over, Starting Now takes place. You’re just one telephone call away from taking the important actions to return to leading a healthy, balanced, and stress free life.
As Canadians, we have a tendency to assume that our universal health care system will cover everything in a health crisis. We don’t focus on the possibility of medical bankruptcies in Canada like Americans do. The Canadian health care system is extremely comprehensive. But, there is no such thing as 100% coverage for every health care issue that may arise. As an example, the cost of some prescription drugs can be prohibitive.
Medical bankruptcies in Canada: Additional medical insurance plans
Most insurance plans dictate that only a generic substitute can be covered by the insurance. What if it is a new or unique drug where there is no generic version? Some people think because all the health care costs are paid for they will not suffer financially. Many people do not consider the possibility that poor health will prevent them from working. But what if they are not covered by a disability plan that will replace their income. They also were not able to build up an emergency savings plan for when of such an event.
The likelihood is that the older we get, the more reliant on prescription medication we’ll become. Did you know that paramedical services like physiotherapy is not covered, or only partly covered? And, coverage varies from province to province.
Medical bankruptcies in Canada: A health crisis can trigger a financial crisis
Sun Life Financial recently did a survey that clearly demonstrates that a health crisis can definitely trigger a financial crisis:
78% of Canadians haven’t saved or planned for a health event
Medical bankruptcies in Canada: You may be retirement age, but can you afford to retire and lose your extra health coverage?
If you’re fortunate enough to work for a company that provides health care benefits, then this issue may not affect you today; but what will happen once you retire or work for a company that doesn’t provide benefits? At risk are many self-employed people if they don’t have an extended health care plan if a serious health care event takes place.
We’ve written several blogs discussing that many Canadians are working well past the age of 65 to make ends meet. In the Sun Life Financial survey 41% of people who retired sooner than expected cited personal health care as the primary reason. What would you do if you had to retire sooner than expected and had to pay for medication and services not covered in our universal health care plan?
Medical bankruptcies in Canada: How to solve a financial crisis
If you’re in the midst of a financial crisis due to a health crisis, or for any reason, contact Ira Smith Trustee & Receiver Inc. We understand how stressful a time this can be for you and we can get you through this. If you follow our plan, then before you know it you’ll be able to regain your former quality of life. Give us a call today and you’ll be well on your way to Starting Over, Starting Now.
Now that Valentine’s Day is over, we need to not lose that loving feeling. Many Canadians are not crazy with their love one’s finances. They may wish to book a financial date evening. Many are keeping debt secrets from their partner, or fear they are hiding financial information from them. Perhaps now is the time to come clean with secret debt in marriage.
Secret debt in marriage: A recent survey
A brand-new survey identified that Canadians in a relationship (whether living separately, common law or wed) wish they can change a minimum of one of their partner’s financial behaviours. But their loved one could be oblivious. Many reported seldom or never ever talking money or budgeting with them.
Secret debt in marriage: We have previously written about this tender subject
Spouses or partners holding secret debt in marriage is nothing new. We have previously written on the topic, and others involving couples, including the following blogs:
When it concerns taking care of debt as a couple, I recommend complete and honest disclosure. Work together to check your debts and make a household budget. Plan together how your household income will allow you both to pay ordinary monthly expenses, pay off debt and hopefully, save for emergencies and retirement.. Budgeting discussions are not easy, but if you can prepare a realistic one and stick to it, your relationship will find a new level of love.
Secret debt in marriage: What if you find out that talking and budgeting is not enough?
Although we are not social workers or marriage counselors, we are expert in helping people work through their financial challenges.
That is why the Ira SmithTeam always looks first to see if one of the bankruptcy alternatives would be a better fit for you. The alternatives we look at with you include:
The Ira Smith Team has 50+ years of cumulative experience dealing with issues just like the ones that you’re facing. Give us a call today and let us give you back peace of mind Starting Over, Starting Now.
The great North American dream is still home-ownership. Unfortunately withsoaring house prices,increasing interest rates andstricter mortgage regulations, many Canadians may not be able to realize their dreams. As a result, a new trend is starting which I describe below. The issue is whether this new behaviour, causing a personal debt load increase, is reasonable or not.
Personal debt load increase: The current housing market trend according to Statistics Canada
These factors are making it increasingly difficult for young people to break into thehousing market. According to Statistics Canada, young adults today are:
More likely to live in apartments than their 1981 counterparts
Less likely to live in single-detached homes
More likely than ever to still be living at home
Personal debt load increase: Desperate times call for desperate measures
As parents you want to give your children every advantage in life, including helping them realize their dreams of home-ownership. But, what can you do? At the rate at which house prices are rising, if you wait until they reach adulthood and are ready to purchase their first home, will you be able to help them buy that house?
The old adage Desperate times call for desperate measures, seems to apply here. There is a growing number of parents who are buying houses for their children who are still school-aged; some as young as five years of age.
Personal debt load increase: The future value argument
Brad Lamb, president of Brad J. Lamb Realty & Lamb Development Corp. is one such parent. Mr. Lamb recently purchased a condo for his five-year old daughter. He purchased an 800 square foot condo in Toronto for about $450,000 which he estimates that he can rent for $2,500/month. Mr. Lamb calculates that in 15 years (when his daughter is 20) the condo will be worth in the $3 million range.
Personal debt load increase: Is it a good idea to buy a home for your school aged kids?
Clearly Mr. Lamb is in an income bracket that would allow him to purchase a $450,000 condo without putting himself into financial jeopardy. However, the same can’t be said for many parents who arebuying homes for their school aged kids. Some are making an enormous financial sacrifice in the quest of guaranteeing their children home-ownership. And it’s difficult to speculate on the real estate market 10 – 15 years in the future.
Over the time you hold the property until your child can live in it. There will be fluctuations in the real estate market. You can’t be the type of person that worries every time there is a temporary decline in the market. For example, will higher interest rates lower home prices? We have been in essentially a zero interest rate environment for 10 years. The Bank of Canada is now slowly increasing interest rates. Remember that the change in value of the home only counts if you have to sell it. Until then, increases or decreases are merely on paper only.
Personal debt load increase: A different viewpoint
Susan Latremoille, director of wealth management and wealth adviser at the Latremoille Group and Richardson Group GMP in Toronto, has very strongopinions on the subject. She says, “I think it’s a crazy idea. I would not recommend my clients to do it. If parents already own their own home, they will have to pay a capital-gains tax should they decide they need to sell the additional property, as they can’t put the children’s names on the property title unless they are adults”.
What if the property is a negative cash flow rental property? It isn’t just being able to afford purchasing the property. You are going to become a landlord for many years. If the costs of holding the property are greater than the income it generates annually? That makes it a negative cash flow investment property. Can you afford to pay out that extra cash year after year? Of course the expectation is that the value of the home will continue to increase. Negative cash flow from assets is still not a winning formula for the long-term.
Personal debt load increase: You can’t put yourself at financial risk today for someone else’s future – even if that someone else is your child
Putting yourselfat risk financially to buy a house for your kids is never a good idea. The best thing that you can do is get your own financial house in order. That may allow you to make an investment in your children’s’ educations and perhaps even allow you to help them buy, or at least be able to help with, that first house.
If you need help getting your financial house in order, contactIra Smith Trustee & Receiver Inc. The results for our clients are financial peace of mind and debt free living. With onephone call you can get rid of the financial stress and feel like you’re in control againStarting Over, Starting Now.
I have written before on the more practical aspects of Ontario bankruptcy discharge certificate issues and process within Canadian bankruptcy and insolvency law. The most recent blogs are:
I recently reviewed the Ontario Court of Appeal decision in Cole v. RBC Dominion Securities Inc., 2017 ONCA 1009. This case is very interesting as it highlights an issue that we often don’t talk enough about when advising a person on what they might expect at their hearing under Canadian bankruptcy and insolvency law.
The facts
Henry Cole, age 52, had a Bankruptcy Order made against him in 2011 upon motion by Royal Bank of Canada (“RBC”), after he misappropriated $5 million from clients while working as their investment advisor. While in bankruptcy, he had a net monthly income of $14,600, resulting in surplus monthly income of $12,500. He nevertheless failed to make any surplus income payments.
The Ontario Court of Appeal (“ONCA”) upheld the two lower Court decisions
As is the case in bankruptcy matters, Mr. Cole’s bankruptcy discharge hearing came before the Master in Bankruptcy Court who also sits as the registrar in bankruptcy. Mr. Cole appealed the Master’s decision (discussed below) unsuccessfully to a Judge of the Bankruptcy Court. The Judge dismissed Mr. Cole’s appeal, thereby upholding the Master’s decision. As indicated above, the ONCA agreed with the Judge (and the Master) in dismissing Mr. Cole’s appeal.
Now for the interesting stuff!
Now for the interesting stuff. The Master determined that there was enough evidence to show that Mr. Cole, as a bankrupt, committed various bankruptcy offenses. The Master determined facts for which discharge may be refused, suspended or granted conditionally, under Section 173(1) of the Canadian bankruptcy and insolvency law called the Bankruptcy and Insolvency Act (Canada) (“BIA”).
The Master determined that Mr. Cole had failed to provide information to enable the Licensed Insolvency Trustee to calculate surplus income. Mr. Cole also conceded to the following facts:
his assets upon bankruptcy were not of a value equal to fifty cents on the dollar on the amount of his unsecured liabilities. Mr. Cole gave no evidence why he should not be held responsible;
he failed to account satisfactorily for any loss of assets or for any deficiency of assets to meet his liabilities; and
he brought on, or contributed to, his bankruptcy by rash and hazardous speculations, by unjustifiable extravagance in living, by gambling or by culpable neglect of his business affairs
With these findings, the Master, under Section 172(2) of the BIA, had to not grant an absolute discharge and to:
refuse the discharge of a bankrupt;
suspend the discharge for such period as the court thinks proper; or
make the bankrupt, as a condition of his discharge, to do such acts, pay such moneys, consent to such judgments or comply with such other terms as the court may direct.
I must point out that the options available to the Master are not mutually exclusive. So, just like in Mr. Cole’s case, you could have the Court come up with a mixture of a suspension and a condition to pay moneys.
What the Master decided
The Master made several decisions. First, the Master dealt with the surplus income issue. The Master ordered Mr. Cole to pay $284,346 to the Trustee as surplus income, payable at a rate of $5,000 per month.
The Master also considered Mr. Cole’s criminal behaviour and that he had real income while not working any longer as an investment advisor. Given the amount of Mr. Cole’s liabilities, and for the integrity of the Canadian bankruptcy system, the Master ordered as further conditions that:
Mr. Cole pay an extra $5,000 per month to the Trustee for a further six years for a total more payment of $360,000; and that
Mr. Cole argued before first the Judge, and then the ONCA, primarily that the Master’s treatment of surplus and other income was in error. He also argued that the Judge’s finding in dismissing his appeal was an error. The ONCA disagreed and dismissed his appeal.
So what is the lesson to be learned?
It is important for the Trustee, when sitting down with the person contemplating an insolvency proceeding, to understand all the facts. By properly understanding all the facts, we can provide proper professional advice and guidance.
Someone who had a facts situation like Mr. Cole, we would have strongly advised him or her to avoid bankruptcy and to contemplate performing a Division I Proposal to compromise his debts. The reasons we would have advised this are:
the debtor has real income to successfully do a Proposal;
Mr. Cole never would have qualified for an absolute discharge from bankruptcy given his facts situation and any discharge conditions would be onerous;
avoiding the ongoing calculation of surplus income up to the time of his bankruptcy discharge hearing; and
with the support of his major creditors, it is possible that the Proposal amount could have been somewhat less than $644,000 (subject to knowing the value of his assets at the date of bankruptcy).
he person needs our advice in plain English before making any decisions
We also would have advised the debtor the type of the rough ride they were in for if they chose to go ahead with the bankruptcy option. We would have explained in detail how we believed the Canadian bankruptcy and insolvency law system would treat him, so at least there would be no surprises during the bankruptcy administration.
Many times people we speak with do not like to hear the truth, and begin “Trustee shopping” until they find a Trustee that does not tell them all the bad news up front. People like this believe that if they aren’t told it, it can’t happen. This is a mistake. We believe everyone deserves to know the truth about their situation, to help them make the best decision possible.
In Mr. Cole’s case, not only did he find out the hard truth from the Court, he then spent money on his lawyers appealing the Master’s and Judge’s decisions. That obviously was extra money spent with no benefit received.
FULL DISCLOSURE: Our firm has never met with Mr. Cole and was not considered to be his Trustee.
What to do if you have too much debt
Declaring personal bаnkruрtсу in Canada is a big deal. So is getting your Ontario bankruptcy discharge certificate. While it can be a way out for the honest but unfortunate debtor who is deep in debt and looking for a new start, there are rules, rеѕtrісtіоnѕ and fіnаnсіаl rаmіfісаtіоnѕ.
That is why the Ira SmithTeam always looks first to see if one of the bankruptcy alternatives would be a better fit for you. The alternatives we look at with you include:
The Ira Smith Team has 50+ years of cumulative experience dealing with issues just like the ones that you’re facing. Give us a call today and let us give you back peace of mind Starting Over, Starting Now.
charities in toronto and york region looking for volunteers
Charities in Toronto and York region looking for volunteers: Introduction
You work hard for your money. If you’re like many Canadians, you generously share your good fortune with those in need. Charities in Toronto and York Region looking for volunteers need your help also. Volunteering is an excellent way to give back to your community. For those with high debt levels, volunteering will reduce the tension between wanting to contribute to your favourite charity, but not being able to afford it.
Corporations also support the volunteer efforts of their employees. At Ira Smith Trustee & Receiver Inc., part of our firm values is that each staff member must volunteer some of their time to the community, not just make donations.
Charities in Toronto and York region looking for volunteers: Canadians are generous
According to Statistics Canada, a large majority of Canadians make monetary donations to charitable or non-profit organizations. In fact, the most recent statistics shows that just over 24 million Canadians aged 15 years and older donated. This means 82% of the population, had made a monetary donation.
Charities in Toronto and York region looking for volunteers: How much goes to charitable good works vs. administration
It’s important that you know how much of your money is used for charitable good works. How much is going to administration? It may change your mind about which charities ultimately benefit from your donations, time, or how much you decide to give.
Charities in Toronto and York region looking for volunteers: The Charity 100
MoneySense has produced something they call the Charity 100 for the last eight years. This list, composed of the leading charities in Canada, measures them by the following four criteria:
Charity Efficiency – how much of your money actually goes towards supporting the organization’s mission
Fundraising Costs – how much money it takes to raise the money
Governance & Transparency – whether the charity adheres to standard non-profit governance models and whether it lets donors know exactly how their money is being used
Cash Reserves – does the organization have an adequate reserve fund
Charities in Toronto and York region looking for volunteers: How to fix your debt level so that you can give to one day
Some of you reading this blog would love to concern yourselves with researching organizations deserving of your donations, but right now you’re struggling to pay the bills and are looking for a way out of debt. You may feel like you’re in a dark tunnel but The Ira Smith Team is here to shine a light on your financial situation.
We have a cumulative 50+ years helping people just like you get back on track financially. Give us a call today and take your first step towards debt free living Starting Over, Starting Now.
charities in toronto and york region looking for volunteers
Since there are various provincial run casinos, horse racing and lotteries, we are often asked if you can have a gambling debt bankruptcy. More importantly, what clients really want to know is, can gambling debt be discharged in bankruptcy?
Gambling debt bankruptcy: What is gambling debt in bankruptcy?
We first must go back to basics. There are two types of gambling debts:
Debts for loans taken out, either direct loans or through credit cards; and
Loans directly from a casino with “markers”.
In the first case, the loans or credit card debts could be direct – using the cash advance to gamble with, or indirect – used to make purchases for the necessities of life because the person gambles away their employment or other income. The use of markers at a casino is obviously a direct gambling debt.
In the context of this discussion, it does not matter if the gambling debts are direct or indirect. As discussed in this blog, the gambling debts are legally enforceable. As such, gambling debts in bankruptcy (or a proposal) are claims provable under the BIA.
Gambling debt bankruptcy: Gambling debt and bankruptcy
You can declare bankruptcy on a gambling debt. So is it really as simple as declaring bankruptcy? The answer is no. There are various issues that you must first consider with the licensed insolvency trustee during your first free consultation. The major issues are:
The nature and amount of your other debts because you lost cash in gambling
Have you not been paying your taxes because of gambling losses and Canada Revenue Agency is also a major creditor
Getting gambling addiction advice
Getting a discharge from bankruptcy
Is there another option available to you in order for you to avoid bankruptcy
Gambling debt bankruptcy: There are many issues in addition to just getting gambling addiction debt help
If you are insolvent and you choose the bankruptcy route, you will face the following issues:
If you have non-exempt assets or equity in non-exempt assets, your interest in those assets will be taken over by your trustee. For example, your interest in the matrimonial home would come to the trustee and now your spouse, or other friend or relative, would have to purchase your interest back to the cash could go to your creditors. Go explain that to your spouse!
Earning more than essentially a poverty line amount will cause you to have to pay surplus income to the trustee for the benefit of your creditors. If you are a first time bankrupt, with surplus income, you will have to pay the surplus income for 21 months. You can’t seek a discharge from bankruptcy until then.
If you have been bankrupt before, the 21 months becomes 36 months.
Once you show that your debts are due to gambling losses, you can expect your lenders and credit card companies to oppose your discharge from bankruptcy.
gambling debt bankruptcy
Gambling debt bankruptcy: Including your discharge from bankruptcy and your gambling addiction
If you owe a large amount of unpaid income tax to Canada Revenue Agency, you can expect them to vigorously oppose your discharge from bankruptcy.
Your trustee must oppose your discharge from bankruptcy when your bankruptcy is a result of gambling debt. The reason is under the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3(“BIA”), there are various facts, if proven, it is impossible to get an absolute discharge from bankruptcy.
Section 172 of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3(“BIA”) allows the Court to make an order of discharge which is either absolute, conditional or suspended. Where a fact under s. 173 of the BIA is proven, an absolute discharge is precluded.
Gambling which brings on or contributes to bankruptcy is a recognized s. 173 fact. (BIA, s. 173(e)). That is why your trustee would have to oppose your discharge from bankruptcy.
In reaching any decision on your discharge, the Court and the trustee need to maintain the integrity of the Canadian insolvency system. You can assume that your discharge will at least be conditional upon you paying a certain sum of money to your trustee for the benefit of your creditors. A bankruptcy discharge suspension for a certain time after you fulfill the payment condition is also possible. If your behaviour was especially egregious, your discharge from bankruptcy may be outright refused.
The bankruptcy discharge hearing is a full Court hearing. You will be well advised to retain experienced insolvency legal counsel to come with you to Court. This is an expense you may not even be able to afford.
If you want to have a chance in obtaining a discharge from bankruptcy, you will also have to show that you are taking concrete steps to deal with your gambling addiction by getting gambling addiction advice. That will include proving in Court that you enrolled, attended and completed at least one recognized rehabilitation program for gambling addicts.
Gambling debt bankruptcy: Going bankrupt doesn’t seem to be an easy fix
You are right about that. As if the above 11 issues weren’t enough, depending on your specific circumstances, there could be more. Therefore, I always recommend to debtors that if there is hope for the person to be able to successfully restructure through either a consumer proposal or Division I BIA Proposal, that must be seriously looked at and considered preferable to going bankrupt.
Gambling debt bankruptcy: What must you do if you have gambling debts and are considering personal bankruptcy?
Do you have unmanageable debts from gambling, other addictions or for any other reason? Be proactive; it’s time to rehabilitate yourself and deal with your debt while you still have alternatives.
The Ira Smith Team has years of experience assisting Canadians like you, getting you back on track to debt free living. CallIra Smith Trustee & Receiver Inc. today so that we can help you regain control of your life and be stress-free, Starting Over, Starting Now.
